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Take a Housing Loan With Spouse and Get These Benefits

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A National Family and Health Survey was conducted in 2015-16 involving 64,000 Indian couples. It was found that approximately 33.3% of such couples were all employed individuals; while for the rest, only the male was a working individual.

Contrastingly, in the North-eastern states of India, approximately 50% of the women are employed in the organised sector.

This streak of growing employment amongst females is also noticed in several other states. States such as Chhattisgarh, Andhra Pradesh, and Jharkhand boast of above 45% involvement of women in the workforce. Other than that, states such as Maharashtra, Tamil Nadu, Telangana, and Karnataka have above 30% of females involved in employment.

Resultantly, more and more married couples are now working individuals. In order to embrace a growing parity between males and females in terms of employment, financial institutions have adopted several measures which allow individuals to reap double the benefits from financial products such as joint home loans.

Women employment and home loan growth statistics

  • 65% – Percentage of wage a female earns with respect to male earnings in India. It is one of the highest in the world.
  • 3% – Year-on-year growth of home loans.
  • 8% – The growth rate of home loans in the current FY.

These encouraging numbers, which is speculated to grow in the coming years, will have an exceptional effect on the Indian economy.

Benefits of joint home loans

One of the major reasons home loans in India are expected to perform well in the future is due to the growing capacity of individuals to afford such loans. When you avail a home loan jointly with your spouse, who is also salaried, it enhances your financial capacity to repay the loan on time without affecting your financial standing.

Below discussed are a few reasons why you should consider co-borrowing a home loan with your spouse –

  • Improved credibility and eligibility

When you apply for a home loan with your wife, it bolsters your financial credibility. The financial institution considers both your incomes and assesses your repayment capability based on that. Resultantly, you become eligible for a higher quantum of home loan due to increased capacity. It will allow you to opt for the more expensive property. You can check the amount you are eligible for when you co-borrow a property with your spouse using a home loan eligibility calculator.

  • Tax benefits on joint home loans

In addition to the improvement in credibility and eligibility, you are also entitled to double the tax benefits when you co-borrow a loan with your spouse. However, your spouse should also be the co-owner of the property to be purchased with the loan in order for her to be eligible for the tax benefits. Better savings on taxation is one of the reasons why you should consider owning a property with your spouse.

There are 2 sections in the Income Tax Act, 1961 which offer tax benefits on home loans. These are –

  1. Section 80C – Both you and your spouse are eligible for tax exemptions of up to Rs.3 lakh in one Assessment Year on the principal component of your EMIs when you co-borrow and co-own a home loan and residential property, respectively. In case you sell the property, tax exemptions till such year would be revoked and added to your taxable income in the year of sale.
  2. Section 24(b) – Under this section, you and your spouse can avail tax exemptions of up to Rs.4 lakh on the interest component of your EMIs. You can avail such exemption on under-construction properties as well. In addition to this, if you and your spouse are first-time homebuyers, you both can avail another exemption of Rs.3 lakh under Section 80EEA. However, such a loan cannot exceed Rs.45 lakh and shall be availed within 31st March 2020.

Know everything you should about saving tax when you avail a home loan to best plan your finances and reduce the overall loan repayment burden.

The pointers mentioned above are a few benefits of availing a home loan with your spouse. Before you apply for a home loan, compare and contrast between different financial institutions to find affordable home loan interest rates. Due to successive repo rate cuts from the RBI, this is the perfect time to buy your dream home.

Additionally, assess your joint financial capacity and obligations, both present and prospective to determine suitable loan terms and tenor. You can use an EMI calculator to gauge the EMIs and assess whether you can accommodate it in your financial plan without affecting your fiscal standing before availing a joint home loan.

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